The Economic Issues

The percent of the monetary wealth owned by the top 10% of U.S. citizens from 1910 to 2010. Note the massive spike during the 1920s, up to approximately 49%. During the Progressive Era (Pre-1920 on this graph), the wealth gap was large, but nowhere as large as in the "Roaring" 20s.

﻿Income Gap

During the 1920s, the gap between the rich (Top 10% of citizens) and the poor (Bottom 90% of citizens) was at the highest it had ever been in United States history before that point. This was mostly due to the stock market boom that occurred during this time, as well as a massive confidence spike from investors in certain stocks.

There was also a mass belief that the United States was entering a state of prosperity for all; that it was "Too big to fail", so to speak. However, this was entirely a false idea, as 60% of all Americans during this time were below the poverty line (Textbook). Additionally, the 30% of the population that were not in poverty, and were not in the top 10% richest, only had a minor wealth gain of below 10%: a healthy amount, but certainly not "Roaring". As a whole, this false prosperity kept a majority of people from noticing the oncoming depression until it eventually occurred.

Finally, there was a relatively new concept which had a massive increase during this time called Consumerism. U.S. citizens mass purchased numerous new appliances which had recently been invented, such as the automobile; the washing machine; and the radio. This also coupled with the creation of modern advertising in newspapers and on the radio, which persuaded citizens to purchase items even if they could not truly afford them.

People bought items without being able to afford them by use of a new financial item known as "Installment Plans". These plans worked in a similar way as modern credit cards in that people could live a "Buy now, pay later" lifestyle. These were paid in small payments every month, so that all citizens could live like the wealthy elite.

All of these heavily contributed to the economic collapse of the late 20s and the subsequent depression in the 30s.